Why can't WFC be a physical process? Yes, when a photon on the Moon is measured it immediately changes the "wave function" of a photon on Earth from 50/50 to 100/0. But the wave function was always a probability, and probabilities always allow for hidden information. To the observer, entangled or not the calculation is still 50/50. And you can't e.g. "force" 1,000 entangled photons all to be positive to create an unlikely unusual scenario.
WFC collapse or no, both observers experience their own independent 50/50 photon collapse. It doesn't matter which observer measures first or if there is no "first" at all. The WFC may or may not be instantaneous because it doesn't matter. The fact that the particles are entangled doesn't affect observer A until he's able to observe observer B and vice versa.
For all we know all of our particles could be entangled with other particles halfway across the universe, it can't affect us until the speed of light reaches us so we can observer ourselves that the other particles are entangled.
Also why Hyperion isn't blurred, despite the fact that all of the particles which affect it are too small to be measured, is because Hyperion isn't too small to be measured. The particles aren't too small to be "measured" by Hyperion when they affect Hyperion, and just because Hyperion is further away from us doesn't mean it behaves and differently. And by seeing Hyperion's chaotic orbit we still can't predict those "unmeasurable" particles.